Is flood insurance necessary?

FloodWhen buying a new home, there are many things to take care of before signing the closing paperwork. You need to make sure you have not only the proper homeowners insurance, but also any additional insurance, such as flood insurance. Flood insurance is not required, even if your new home is in a flood zone, but is a good idea for every homeowner to invest in.

Flood insurance is not offered by any insurance agency, and must be purchased from the federal government through the National Flood Insurance Plan. Although it is not required by law to have flood insurance, some lenders might require it. If your loan is backed by the U.S. government, such as the Federal Housing Administration, and your home is in a high-risk flood zone, you are required to purchase flood insurance.

There are two types of flood insurance, a standard policy, and a preferred risk policy. A standard policy is for people who live in high-risk flood areas and cover both your home and your belongings. When determining the premium, the NFIP takes into consideration number of floors, contents, year the house was built, where it’s located, and how many people it can hold. Preferred risk policies have lower premiums and are designed for people who live in low to moderate-risk flood areas.

Flood insurance does come with maximums for the amount it will pay out in the event of damage. The maximum for personal items is $100,000 to cover items such as clothing, electronics, and appliances. The maximum for residential property is $250,000, to cover required items in the basement, such as hot water heaters.

Pulp Street Corporation can help you determine if you should invest in flood insurance for your new home. They can also provide the best homeowners insurance plan to best fit your needs in your new home.

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